McKinsey & Company reports that 90 percent of annual revenue across industries is documented in contracts. Yet, most businesses invest less than 1 percent of their resources into contract development standards and best practices. Managing the contract lifecycle, however, has become an increasingly complex task where mistakes can cost companies an estimated 9 percent of annual revenue.

While implementing contract lifecycle management best practices has become a key indicator for a procurement department’s success, leveraging automation processes powered by artificial intelligence (AI) may present the most important best practice to employ right away. 

Contract Lifecycle Management Best Practices and AI

Gains in AI over the past few years have enabled forward-thinking corporate legal departments and procurement teams to streamline the contract management process. Companies that have invested in AI technology are enhancing their contract processes to negotiate faster, further mitigate risk, and increase savings. Consider the following ways an AI-powered contract negotiation platform can help companies implement contract lifecycle management best practices. 

Increased Automation

Contract lifecycle management best practices involve automating contract management processes as much as is practical. AI automates the most onerous parts of contract review, markup, and negotiation to simplify contract lifecycle management. The AI can identify key clauses and terms to ensure they adhere to a company’s digital playbook standards. Further, advanced AI technology performs automatic redlining and contract risk analysis in just a few minutes. Contract review that once required days or even weeks to complete can now be accomplished in just a few minutes.

Template Agreements

Certain types of contracts benefit from the establishment of boilerplate language and approved fallbacks. Legal departments save considerable time and effort by pre-approving sets of terms, conditions, and legal language that apply to entire contract subsets. Contract lifecycle management that leverages AI can expedite deals by comparing a new contract to company standards—searching for outliers, fixing errors, and flagging omissions—to decrease time spent in contract review and negotiation.  

Frictionless Approval

Many contracts stall between junior reviewers and senior attorneys or when passing from one party to the next. Worse yet, contracts may linger in abeyance during the onboarding process if the available intake personnel are out sick, on vacation, or preoccupied with other tasks. Automating the contract approval process with programmed pre-approvals and emerging blockchain technologies helps sales and legal teams close deals significantly faster. 

Collaborative Communications

Electronically or physically sending contracts back and forth represent outdated practices that waste time and money. Alternatively, a cloud-based AI platform can enable real-time access for uploading new agreements for review, with automated notifications forwarded to appropriate parties as soon as a draft becomes available for review. Revision suggestions, based on company guidelines, can be accepted with the click of a button.

LexCheck Supports Next-Generation Contract Lifecycle Management

LexCheck represents one of the most advanced platforms for automated contract review and negotiation. Founded by “Top 40 Under 40” attorney Gary Sangha, who also serves as a CodeX Fellow at the Stanford Center for Legal Informatics, LexCheck leverages AI and Natural Language Processing (NLP) to reimagine contract negotiation. Employing LexCheck’s technology, companies like RSM and NetApp have been able to reduce hires of lower-level reviewers while simultaneously reducing the burden of routine contract review that otherwise would have shifted to senior staff members. 

How LexCheck Benefits Legal Departments and Procurement Teams:

• Scans, redlines, and analyzes contracts in mere minutes.
• Performs auto-deletions and textual revisions.
• Makes playbook-guided, contextual insertions into new contracts.
• Processes contracts in a secure, cloud based repository
• Integrates with your existing IT infrastructure for quick, easy implementation.

Digitizing, updating from manual processes, and streamlining contract negotiations will be the future for all successful enterprises. By harnessing the power of AI and NLP, LexCheck can bring the future of contract review and negotiation to your company’s contract lifecycle management practices.